Economic Insanity Summary

In the crop of recent books analyzing America’s economic doldrums, ECONOMIC INSANITY: HOW GROWTH-DRIVEN CAPITALISM IS DEVOURING THE AMERICAN DREAM serves as a primer. This book restates facts often clouded by political rhetoric or corporate pleading: that goods and services exist primarily to meet the needs and wants of humans (not to make a profit); that money itself is merely a tool; that exponential growth and exponential debt cannot go on forever. Growth in the money supply is the “leading edge” fueling productivity and economic expansion through debt.

These arguments merely restate the assumptions of conventional economists. The author, however, thinks their prescriptions for reviving the economy are wrong. All mainstream plans, from those of Robert Reich to those of Jack Kemp, have assumed that greater productivity is the answer. The United States now has phenomenal productivity, Terry notes, but where are the benefits to the average worker? The “paper economy” has given them all away to manipulators of short-term finance. Technology is used to produce endless “upgrades” that nobody really needs and that fewer and fewer consumers can afford. Americans must somehow change course to a limited growth economy—and even accept a no-growth paradigm—or the whole system will explode.

Although this idea is unorthodox, the way the author hopes to attain it is not. He wants cooperative and/or employee ownership of small and medium-sized enterprises, and public oversight of defense, utility, communications, and similar industries. How we get “from here to there” is left unclear.

Terry’s book ignores insights offered by other radical economic thinkers: the prospect that technology may make most people’s labor unneeded; the artificial distinction drawn between services visible to economists and “invisible” ones performed within the household or voluntary groups; the possibility that a healthy economy may truly require war or its moral equivalent (we are, after all, just emerging from a forty-five-year Cold War).

If ordinary citizens become desperate enough to challenge the status quo, they probably will not remember this book’s analyses or plan. Yet they may seize upon a little-known fact it reveals. “We the people” still retain the right to revoke a corporation’s charter, if it does not serve the public weal.

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